7.1 Introduction

The value of the Indian biopharma industry is estimated at nearly US$2 billion and is growing at 14.25 per cent annually.¹ Since the de-licensing of the pharmaceutical industry as a whole, manufacturers produce drugs approved by the Drugs Control Authority. The pharmaceutical industry in India is further regulated by, among others, the Factories Act 1948, which deals with occupational health and safety; the Environment Protection Act 1986, which provides for the protection and amelioration of the environment; the Water (Prevention and Control of Pollution Control) Act 1974, and the Air (Prevention and Control of Pollution) Act 1981, which were introduced by the Central Pollution Control Board (CPCB) to lay down standards for effluents and emissions; and the Hazardous Wastes (Management and Handling) Rules 1989 for the safe handling and disposal of hazardous material.

India is fundamentally a resource-scarce nation, and the strains of a rapidly expanding economy are already manifesting themselves in the guise of power cuts, water shortages, dwindling areas of arable land and landfills quickly reaching capacity. In this context, lowering energy consumption, understanding methods for the reduction of a company’s carbon footprint and using resources more productively are major focus areas for the biopharma industry. This can be achieved in small ways by simply using energy-saving bulbs and cutting down on non-essential travel; but to find real and tangible savings, biopharma companies are seeking to fundamentally alter their production processes. In this endeavour, compliance with the environmental, health, and safety (EHS) guidelines can facilitate a company in achieving its business and environmental goals.

7.2 The environmental, health and safety guidelines

The EHS guidelines are technical reference documents published by the International Finance Corporation in 1998 which seek to manage risk, reduce cost and promote and protect life, property and the environment. They contain examples pertaining to general and industry specific practices in line with the Good International Industry Practice (GIIP). EHS guidelines for the biopharma industry are contained in the ‘Environmental, Health, and Safety Guidelines for Pharmaceuticals and Biotechnology Manufacturing’. These guidelines, read together with the general EHS guidelines, give users such as global pharmaceutical companies the opportunity to assess and evaluate contract manufacturing organisations (CMOs), active pharmaceutical ingredient (API) suppliers, R&D laboratories and logistics centres. The EHS guidelines give users a clear perspective on relevant issues to the biopharma industry.

The EHS guidelines for pharmaceuticals and biotechnology manufacturing include information relevant to pharmaceuticals and biotechnology manufacturing facilities. They cover the production of active pharmaceutical ingredients and secondary processing, including intermediates, formulation, blending, packaging, related activities research, and biotechnology research and production.²

The EHS guidelines are generally not rigidly applied to every project or manufacturing process. Rather, they should be complied with taking into account variables such as the host country context, the operating environment, professional and technical opinions of experienced and qualified persons and a specific project’s hazards and risks which are highlighted by an environmental impact assessment. It is often seen that a country’s regulations and the EHS guidelines may differ. When such circumstances arise the more stringent of the two should be implemented. If this is not possible, a detailed account must be made justifying why the alternate choice has been made. It should generally involve reasoning that includes the protection of human health and the environment.

7.3 EHS guidelines and India

India has several strategic advantages in biopharma outsourcing. These include its low manufacturing costs, abundant skilled labour, emerging R&D capability and established technical capacity. However, despite being an attractive destination, India still commands only 3 per cent of the global outsourcing market. There are many reasons for this, including the need for it to improve its EHS compliance, IP rights protection and overall infrastructure.

EHS guidelines assume significance for the biopharma industry in light of the fact that final products have to be of the highest purity and quality, and the difference in the type of waste and pollutants produced by the industry in comparison to other industries. In this regard, several categories of waste are produced which include solid waste, liquid organic waste, liquid inorganic waste, gaseous waste, hazardous micro-organisms and genetically engineered microorganisms. The latter two categories pertain exclusively to the biotechnology research field.

Solid wastes produced contain large polymer compounds that are difficult and expensive to break down. Chemical synthesis processes produce liquid organic waste that contain large amounts of solvents, while liquid inorganic waste sees the use of a large amount of water in diluting or neutralising the waster chemicals in the effluent treatment plants (ETP) before its safe disposal through the drainage system. Gases such as chlorine and bromine released into the atmosphere pose a threat because of their corrosive and dangerous nature and must be scrubbed and neutralised in order to minimise their harmful effects.³ By applying a comprehensive EHS management policy to the design, manufacture and application of biopharma products, meaningful reductions and elimination of these hazardous wastes can be made.

Previously, Indian biopharma companies have had little need or desire to comply with EHS guidelines. India’s environmental laws have been notoriously lacking both in letter and in implementation. However, in today’s globalised world, we are witnessing a radical change in this attitude. The reasons for this are two-fold; first, the Indian regulatory environment has become stricter in terms of enforcement. Second, it has been seen that foreign biopharma companies looking to partner with Indian CMOs for outsourcing are no longer satisfied with local compliance levels, and they want Indian biopharma companies to adhere to their international standards, which are far more taxing from an investment perspective.⁴The reasoning is simple; any products produced by the CMO are in effect products produced by the foreign company and are therefore required to be in compliance with the company’s own home country regulations. These companies look for certain characteristics when choosing CMOs. First and foremost is the delivery of quality material which may include the required amount in the required timeframe and transportation to the correct location. A CMO’s chemical operations are expected to be handled in a scientific manner and it must have the necessary production and analytical infrastructure which is handled by a talented, credible and honest staff.⁵ Furthermore, the CMO must show itself to have experience in manufacturing the products which are required to be produced as well as having a sound and stable financial model.⁶ To buttress the above, EHS compliance is seen as something of the last piece of solving the jigsaw puzzle of finding the correct CMO for a company’s outsourcing operations.

Foreign biopharma companies are so inclined that, regardless of the scale of an operation, EHS guidelines should be complied with by CMOs. These guidelines are considered, by the companies, to be the bedrock of any production facility. In some circumstances where a complete audit cannot be undertaken, an EHS questionnaire is required to be filled in by those CMOs which handle between 1–10 kilograms of a chemical. An assessment will be made by an assessor based upon the questionnaire during a site visit. biopharma companies understand that a CMO’s compliance, or lack thereof, is a reflection on their own practices and therefore it is often seen that the companies agree, prior to the commencement of any project, to commitments on safe working practices from the CMOs.

As Indian biopharma companies grow and seek to find new opportunities beyond India’s borders, their corporate image and practices have come under close scrutiny. EHS guidelines compliance is a way of reflecting to the world that they are responsible corporate citizens and are willing to adopt globally acceptable industry best practices. In this respect, India’s biopharma companies such as Ranbaxy Laboratories, Alembic, Dr Reddy’s Laboratories, Cadila Pharmaceuticals, Zydus Cadila, Arch Pharmalabs and USV, among others, have led the way in adopting EHS guidelines.

In pursuit of EHS compliance, several companies have adopted standards such as ISO 14001 and OHSAS 18001. ISO 14001 specifies the actual requirements for an environmental management system. It applies to those environmental aspects over which the organisation has control. OHSAS 18001 has been developed to be compatible with ISO 9001 (quality) and ISO 14001 management systems standards. The elements of 18001:2007 include policy, hazard identification, risk assessment, legal requirements, SOPs, audit and review and application.

7.4 Challenges faced by Indian companies in EHS compliance

Indian companies are generally classified based on their size and the amount of pollutants that they produce. In terms of size, companies have been classified as small scale industries (SSI), medium scale industries (MSI) and large scale industries (LSI). SSI includes those companies which have an upper limit for investments in plants and machinery of Rs 5 crores. MSI have a band for investment which is between Rs 5 crores and RS 10 crores; and LSI are those companies which may have investments of above Rs 10 crores. On the criteria of pollution, companies are classified in ‘Green’, ‘Orange’ and ‘Red’ categories. The ‘Green’ category includes all non-obnoxious and non-hazardous industries. These industries do not discharge effluents of a polluting nature. The ‘Orange’ category includes companies discharging effluents and gaseous emissions which can be managed using proven technology such as conventional effluent treatment plants. The ‘Red’ category encompasses all of those industries having obnoxious and hazardous processes and effluents of a highly polluting nature.⁷

The EHS guidelines do not discriminate against smaller companies, in as much as that they are not more stringent for these companies; rather, the EHS guidelines have been formulated keeping in mind small and medium-sized enterprises. A smaller industry, therefore, requires a more limited compliance infrastructure to adhere to EHS guidelines. However, despite this, smaller industries do face challenges in implementing EHS guidelines. The primary challenge is that of investment. Typically, an allocation of 6–8 per cent of capital investment⁸ will be required to enable an effective EHS management system. This would require planning and methodical implementation on the part of the company to ensure maximum benefits to the company.

The other challenge facing the industry is a lack of available land. For the most part, biopharma companies are located in industrial development zones set up by State industrial development corporations. This ensures that companies only have limited land at their disposal. The problem in adhering to the EHS guidelines arises when, for example, a company is required to build an ETP but does not have the land to do so because they had not taken this into consideration at the commencement of their operations. For this very reason, it is advisable that Indian companies which are seeking to be EHS compliant undertake to do so from the very beginning of their operations rather than trying to do so further down the line. This would ensure that any difficulties are tackled at an early stage, the costs of being compliant are kept at a minimum and time is not wasted in later implementation.

EHS management should be undertaken in a focused manner, identifying facilities which are to be made compliant. Structures should be designed to ensure the fullest use of daylight and minimize the use of artificial light, as well as using materials such as glass to facilitate the same. Energy efficiency of various high energy consumption systems such as laboratories, ETPs and air conditioners should be addressed and cleaner fuels can be utilised in this regard. Laboratories have the highest usage of energy in respect to their area and design, and the functioning of these laboratories should be closely scrutinised and regulated to fit the requirements of the company. Air conditioning is especially important in the manufacture of temperature sensitive products. ETPs, in processing waste, should have a zero discharge system. Waste in itself can be safely treated by using processes such as reverse osmosis and ultra-filtration which will allow for re-use, boosting a company’s efficiency and productivity. An example of a company implementing an energy saving mechanism is DRL at Miryalguda, Hyderabad, which has harnessed wind power for the natural ventilation of their manufacturing facilities.

7.5 Conclusion

As India continues its rise as an attractive destination for biopharma outsourcing, the extent of implementation of EHS guidelines by its companies will be a determining factor for the industry’s future growth and success. India has been viewed with a suspect record of EHS compliance, and implementation will require a concerted effort from all those involved because, in the short term, investment and expertise will be required. However, in the long term, adoption of the EHS guidelines will bring several tangible and intangible benefits to Indian companies. It will enable them to attract more business from foreign biopharma companies (who are required to be EHS compliant) which will, of course, boost companies’ bottom lines. In today’s world, environmentally friendly policies will do no end of good for a company’s image as a responsible corporate citizen. Finally, of paramount importance is the positive impact that this will have in terms of better safety for employees at the work place and conservation of the environment and its resources.